Elektroprivreda Crne Gore (EPCG), Montenegro’s state-owned utility, has revealed that it has incurred a significant financial burden of €333 million due to legacy contracts with renewable energy producers. These payments stem from incentive schemes established during the administration of the Democratic Party of Socialists, emphasizing the long-term economic implications of these agreements.
The payments primarily relate to guaranteed electricity purchases from renewable energy projects under feed-in tariff structures. EPCG has borne the costs associated with these contracts, which are ultimately passed on to consumers through the electricity pricing system.
A notable example is the Možura Wind Farm, which generated 753,503 MWh of electricity, leading to total payments of approximately €72.3 million. This results in an average purchase price of around €96 per MWh, while the same volume sold to end-users was priced at approximately €44–45 per MWh. This discrepancy has created a negative financial spread exceeding €38.5 million within Montenegro’s domestic supply framework.
Overall, EPCG has reported that while it has paid out €333 million to renewable producers, its revenue from selling this electricity to consumers amounts to only about €140 million. This stark contrast highlights a structural mismatch between procurement costs and regulated retail prices.
The contractual agreements underpinning these payments remain active, with key contracts—especially for the Možura project—extending until 2031. This situation effectively locks in above-market tariffs for several more years, further complicating the financial landscape.
EPCG contends that this model has shifted market risk from producers to the public system, allowing renewable generators to benefit from guaranteed pricing while exposing the utility to fluctuations between procurement costs and regulated tariffs. Although producers had the option to transition to market-based sales, many opted to remain in the guaranteed scheme for its predictable returns.
The financial dynamics have also been influenced by market distortions observed during the 2022 energy crisis. Spot prices on exchanges like Hungary’s HUPX temporarily surpassed contracted tariffs, resulting in a nominal positive spread of around €21.6 million for that year. However, excluding 2022 from consideration reveals a cumulative negative trend, reinforcing EPCG’s assertion that the current system does not reflect a sustainable market-based structure.
This case illustrates a broader regional trend within Montenegro’s energy transition framework, where early support schemes for renewable energy—originally intended to stimulate deployment—are now leading to long-term financial obligations in systems characterized by regulated end-user tariffs and limited wholesale market pass-through mechanisms.
